Agile and Flexible Planning in the Crisis

How companies define new objectives in the short term

by Philipp Schett

The method is neither new nor especially complex. But more and more companies are using objectives and key results – OKR for short – in their target and success planning. People often point to Google as a prime example of the success of this management method. But Intel had successfully introduced the planning and management method back in the 1970s. Now OKR is getting a boost because of the exigencies of the current crisis. For most companies, all their plans for the year are collapsing like a house of cards. What can be done? Nobody can predict what the situation will be like in autumn 2020. An interview with Philipp Schett, Managing Consultant and OKR expert, who introduces agile management planning in globally operating companies for Detecon International in the USA.

Philipp, you have worked for Detecon in the San Francisco Bay Area for more than six years. How are companies responding to the current situation?

Philipp Schett: Like everywhere else, companies here are affected by the crisis in many different ways. For some, their position could become painfully critical as their business has come to a virtual standstill. A few are benefiting, but most companies are having to adapt their planning to the situation and hoping to emerge from the crisis halfway unscathed. Unfortunately, many of them have no choice at the moment but to lay off employees.

You introduce the objectives and key results planning method (OKR) in companies and guide them through the implementation. Is OKR widely used in Silicon Valley?

Google is generally regarded as the blueprint for the successful implementation of OKR. Even if not all of these companies are based here in Silicon Valley, Amazon, Oracle, Twitter, Adobe, and others also use the OKR methodology. And OKR dominates the planning right from the beginning for many startups in Silicon Valley. However, it is important to make it clear that while OKR is a help to these companies, in particular for the faster adaptation of their goals and activities in response to the crisis, it will not protect anyone from the fallout from the crisis. What is happening now is beyond their control. But they probably have an edge in adapting more agilely, redefining goals, and initiating concrete measures more quickly.

So does this mean that OKR is a particularly suitable instrument for crisis management?

That would be an oversimplification. Even if the companies are beginning to realize that the routes taken in the past are no longer effective. They are all looking for answers to the questions of what to do and what to focus on now. In times of crisis, the advantages of agile planning management may become more apparent. But speaking fundamentally, OKR planning and management methodology is intended as a complement to the long-term planning that companies have always used. Globalization and digitalization drive economic activity at such a speed that annual plans – much less projections over a number of years – are no longer appropriate to our day and age. The pandemic is having an impact around the globe. But often enough, regional crises alone are enough to alter completely the basic assumptions of the planning. A company must be able to respond quickly in these situations as well. OKR can support short-term plan revisions, but it also changes the way companies set long-term objectives.

How does OKR pay off in the crisis compared to an annual plan?

Let’s take a highly current practical example from the consumer goods industry that occupied retailers’ planning throughout Germany in March: toilet paper. Toilet paper manufacturers in Germany have had to completely abandon their annual planning in recent weeks. The demand for toilet paper was so huge that they had to increase their production capacities. But perhaps there were not enough machines available to meet increased demand. Or it was not easy to procure raw materials. And the storage capacities were too small. In the short term, many new questions arise that affect different areas in the companies, including different teams in purchasing, production, logistics, or sales. Annual planning in such a company is probably based on a wealth of experience. Planners have a relatively exact idea of when what quantities must be produced. Management sets the targets, and everyone works towards achieving them. But what is happening now in the crisis? Everything must be rethought and planned in the shortest possible time. And all the teams in the company are affected. Whoever uses OKR in its planning is now at an advantage. The teams go through their options, they discuss solutions to possible bottlenecks, then they collaborate to set new goals, and all the actions are coordinated in a single process. The planning horizon is probably a period of several weeks. Because what happens after the crisis? The market for toilet paper may collapse, and the planning will have to start all over again from the beginning.

But surely this can also be planned by the management team?

But that approach frequently ignores employees completely. They are suddenly confronted with a new plan that they do not support because, perhaps, it is based on assumptions that are not entirely realistic. In many companies, we are seeing for the first time that goals are discussed on a team. Imagine, on the other hand, that the employees meet to coordinate their targets. They talk about targets with their team colleagues and not only with their supervisors. They discuss what they want to achieve by working together. All of them enter their targets into a software program and all of them support these targets and know later what they have achieved. This is highly motivating for all because every individual feels that he or she is making a contribution to the common success.

But surely this cannot work without strategy and vision from the very top?

They are still needed, but they serve solely as the guiding light for the concrete planning based on OKR. There may even be a modification of the strategy. Typically, the executive suites draft a vision and then hammer out the details with the department heads. Once the vision is in place, the teams can define the OKR in the next steps. For example, the vision could be to increase sales by 5 percent within the next six months. If planning is centralized, the strategy states when, but not how this goal is to be achieved. Whether the two are compatible is of little interest to top management. Middle management must exert the necessary pressure on the workforce to achieve the target. Following the OKR method, team leaders sit down with their teams and discuss what they can contribute in their purviews to the overall targets – the objectives. So they present their ideas – and then prefer to be measured against these goals with performance indicators – the key results. This also makes it easier to assess project progress. Transparency also makes a decisive difference in terms of acceptance. When everyone knows what the objectives are, employees also feel more involved.

And over what period of time should such plans be valid?

The rule is 90 days, a calendar quarter. In the current crisis, we even recommend reducing this time frame to 45 days. More important than the exact time frame, however, is staying agile and flexible and expediting the company’s ability to respond. If, for example, there are bottlenecks of suppliers due to a regional crisis, a company should be able to respond quickly. Whether that means within 45 or 90 days is irrelevant.

OKR is highly reminiscent of agile development methods in the software industry.

OKR is absolutely comparable to agile software development. We draw on the same mindset. Thinking in strategy iterations, adapting them regularly, implementing the strategy on cross-functional teams, letting these teams set their own goals. This speeds up the entire process. In the past, software was planned in detail from A to Z. By the time everything came together after many months, the requirements may have long since changed. In such a massively complicated structure as complex software, it was difficult to make changes afterwards.

It also took several years for agile methodology to become established in software development. What progress is being made with OKR?

Although the methodology has continued to develop over the years, OKR is not new. But it is only gradually becoming established. One reason: a whole range of familiar management habits must be eliminated. And as long as the legacy planning methodology still produces the desired results, there is nothing to force the change. People do not begin to question the way things have always been done until a crisis like the present one arises or there is new management or they realize that the pace of the economy has become so fast that they can no longer keep up using the planning methods that have long been successful. This is why OKR has been so popular with startups or IT companies. They are not burdened with any previous methods, and people are more open to OKR because software development has been just as successful with agility.

What procedure do you follow when introducing OKR? Management must support the method; otherwise, there could be a lot of opposition from that level.

We try to exclude middle management to some extent. Their sole job is often to accept objectives from on high, pass them on to their teams with the demand for achievement, and then report back to the top. This cannot be fun for anyone and often means stress and only stress. This is why OKR is generally driven by top executives and rarely by middle management. We initially work with people who are, at the very least, in charge of a division or are even at C-level.

And how do the teams become involved?

We secure alignment by setting new objectives with the leadership team at the beginning. They then inform the second level. This group works in turn with their teams to develop the measures they employ to achieve the goals they have set for themselves. In the current crisis, we define OKR with our clients in two hours. This time is a good investment because employees feel that they still have a say even in this difficult period. And the companies verify for all of them what objectives are still relevant and what goals must still be pursued.

You recommend using the SaaS solution Workboard as a planning tool.

This program places the team at the focal point of the planning. The objectives are recorded in Workboard and updated weekly. The range of functions is precisely tailored to these requirements. Responsibilities and tasks can be defined for the individual team members. And Workboard can be integrated easily with other programs, especially with Microsoft Office 365, Jira, or CRM systems like Salesforce. This makes Workboard an ideal companion for the introduction and implementation of OKR.

What are your recommendations for companies in the current crisis situation? Is now really the right time to introduce OKR?

You can at least start the implementation and become familiar with the method now. At the moment, no one has any choice but to plan for the short term. Let’s go back to the example of toilet paper. After barely being able to keep up with demand, the companies are now threatened by the opposite situation. Consumers are oversupplied, and sales will collapse. The planning will have to be done all over again. There are a lot of indications that there will be more than enough reasons for short-term corporate planning even after the crisis. So start now with OKR.